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Tuesday, January 09, 2007

Another dismal show ahead of results


The market, which had opened positive on back of a recovery in the Asian markets, slipped into the red as profit-booking began. IT stocks led the fall on concerns that an appreciating rupee will impact profitability.

With today’s fall, the markets have extended their losses into the fourth straight day.

The 30-shares BSE Sensex lost 85.82 points, to finish at 13,652.15. It had also surged to an intra-day high of 13,748.42, the intra-day low being 13,493.38.

The S&P CNX Nifty lost 22 points, to end at 3,911.40.

The market-breadth, which was strong in the first half of the trading session, turned negative. For 1,274 shares rising on BSE, 1369 declined. A total of 54 shares were unchanged.

The total turnover on BSE overtook the previous day’s, notching Rs 4698 crore, as compared to Rs 3731 crore on Monday. A lot of block deals struck on BSE, as also a debut of Cairn India resulted in the high turnover.

Among the 30-Sensex pack, 19 declined while the rest advanced.

Gujarat Ambuja Cements was the top gainer, up 2.45% to Rs 140, after a huge block deal of 2.25 crore shares was executed in the counter at Rs 136.65 per share, in opening trade. The deal constituted around 1.48% of the company's equity share capital of Rs 272.02 crore (face value Rs 2 per share). The details such as buyers and sellers in the deal, were not immediately known. The cumulative volume stands at 2.30 crore shares on BSE.

PSU oil explorer ONGC advanced 1.45% to Rs 924.10, after surging to a high of Rs 935.90. US crude oil fell below $56 a barrel as winter weather remained unusually warm in the United States. It had slipped to a low of Rs 908.

Index heavyweight Reliance Industries (RIL) rose 0.46% to Rs 1283, on a volume of 4.71 lakh shares. It had also surged to a high of Rs 1288.

Frontline IT stocks were sold heavily. IT stocks led the fall, on concerns that an appreciating rupee will impact profitability. The BSE IT index lost 0.85%, among the BSE sectoral indices. Satyam Computers was the top loser, down 4.40% to Rs 465. Infosys lost 0.59% to Rs 2193.

Reliance Communications lost 2.10% to Rs 426.20 on a volume of 29.71 lakh shares, following reports that it plans to raise up to $1.2 billion by way of a Global Depositary Receipt issue.

HDFC Bank dropped 1.73% to Rs 1010, after the company-scotched rumours of a bonus issue.

HDFC (down 1.73% to Rs 1565), SBI (down 3.30% to Rs 1172.90) and Tata Motors (down 2.33% to Rs 906) were the other losers.

A lot of block deals were struck on BSE today, the notable ones being Pyramid Saimira (2.65 lakh shares at Rs 198 per share), Federal Bank (3.40 lakh shares at Rs 227 per share), Donear Industries (2.53 lakh shares at Rs 228), MICO (1 lakh shares at Rs 3,522.90 per share) Adhunik Metaliks (10 lakh shares at Rs 37.75 per share) and more.

The highlight of today’s trade was a weak debut by oil explorer Cairn India, which traded in discount throughout the day’s trading session. The stock settled at a steep discount at Rs 137.50 on BSE on high volumes of 3.26 crore shares. Cairn India debuted at Rs 140 on BSE, a discount of 12.50% compared to the IPO price of Rs 160 per share. It moved within Rs 155 - Rs 128.65 price range.

The Nikkei average rose 0.86% on Tuesday, as shares of Sony Corp jumped after an upgrade by Goldman Sachs, while JFE Holdings and other steel stocks rebounded from their recent falls. The Nikkei climbed 146.18 points, to 17,237.77.

Expectations that the Bank of Japan may raise interest rates at a policy meeting next week also helped shares of banks. The market was closed on Monday for a national holiday, after the Nikkei benchmark booked its largest one-day percentage fall in six weeks on Friday as investors took profits in shares that logged aggressive gains in a year-end rally.

Hang Seng index lost 131.58 points (0.66%), to 19,898.08.

Oil prices declined in Asian trading on Tuesday, as persistent mild weather in the US Northeast weakened demand for heating oil. Expectations that a midweek US government report will show domestic inventories rising also softened prices.

Light, sweet crude for February delivery dropped 35 cents to $55.74 a barrel in electronic trading on the New York Mercantile Exchange in Singapore. The contract fell 22 cents to settle at $56.09 a barrel Monday on record January winter temperatures in Northeast US.

Meanwhile, in a judgement with far reaching implications, the Authority for Advance Ruling (AAR) said foreign institutional investors (FIIs) investing directly in Indian stocks will have to pay 10% short-term capital gains tax on their portfolio investments.

What this implies is that profits of these funds from investments in securities will be treated as capital gains and not as business income. In short, it can mean that they can only invest in shares and not trade in them.

The latest ruling could mean that foreign portfolio investors may have to pay a 10% capital gains tax, if they off-load shares within one year of holding them. Investments in stocks, if held for a year or more, are exempt from long-term capital gains tax.

US stocks advanced on Monday, led by tech shares, as brokerage upgrades on bellwether companies such as International Business Machines Corp boosted investor optimism. The Dow Jones industrial average was up 25.48 points, or 0.21%, at 12,423.49. The Standard & Poor's 500 Index was up 3.13 points, or 0.22%, at 1,412.84. The Nasdaq Composite Index was up 3.95 points, or 0.16%, at 2,438.20.

As per provisional data, FIIs were net sellers to the tune of Rs 788 crore on 8 January. They were net sellers to the tune of Rs 799 crore in index-based futures and Rs 326 crore in individual stock futures on the same day. Net inflow from FIIs was Rs 0.90 crore on Friday (5 January), when the Sensex lost 11 points.